TC C.S.S.B. 576 75(R) BILL ANALYSIS HIGHER EDUCATION C.S.S.B. 576 By: Sibley (Gallegos) 5-22-97 Committee Report (Substituted) BACKGROUND In the 74th Legislature, urban and rural scholarship funds were created: Section 74.3011, Property Code, DELIVERY OF MONEY TO RURAL SCHOLARSHIP FUND and Section 74.3012, Property Code, DELIVERY OF MONEY TO URBAN SCHOLARSHIP FUND. Both sections allow a local telephone exchange company to deliver money to a scholarship fund for needy students from rural or urban areas to attend college, technical school, or another postsecondary educational institution. Under these provisions, students qualify for these scholarship funds if they live in a local telephone exchange company service area. However, some rural towns are serviced by larger corporations, such as G.T.E. Students living in these rural towns do not qualify for either of these funds. This measure creates a fund, known as the Texas New Horizons Scholarship Fund, where eligible local exchange companies can deposit and collect money for scholarships. These funds will be distributed by the Texas Higher Education Coordinating Board based on certain criteria outlined in the measure, regardless of whether the student lives within a specified local exchange company's service area. PURPOSE C.S.S.B. 576 creates the Texas New Horizons Scholarship Fund and sets forth provisions regarding its administration. RULEMAKING AUTHORITY It is the committee's opinion that this bill does expressly grant additional rulemaking authority to the Texas Higher Education Coordinating Board in SECTION 1 [Section 54.216(b), Education Code] and is referred to in SECTION 3 [Subsection (b)]. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter D, Chapter 54, Education Code, by adding Section 54.216 to read as follows: Sec. 54.216. TEXAS NEW HORIZONS SCHOLARSHIPS. (a) Requires the Texas Higher Education Coordinating Board (THECB) to issue to qualified students a certain number of scholarships, to be determined by THECB, after reviewing the total amount of money available to the Texas New Horizons Scholarship Trust Fund (TNHSTF). Authorizes that a scholarship be used by the recipient to attend an eligible institution of higher education. States that the purpose of the scholarship is to pay for the recipient's tuition and required fees. (b) Requires THECB to adopt rules necessary for the administration of this section, including specific rules relating to the establishment of, criteria for and determination of eligibility for a scholarship, and the total scholarship amount that an eligible student may receive. (c) States that in order for a student to be eligible for a scholarship, a person must: (1) be a Texas resident, as defined by THECB rules; (2) be enrolled as an undergraduate student at an eligible institution for at least one-half of a full course load; (3) meet minimum academic standards; (4) establish financial need; (5) satisfy one or more of the eligibility requirements listed in Subsection (d); and (6) comply with any other requirements adopted by THECB under this section. (d) Mandates that the criteria for awarding a scholarship be based on the following factors, in addition to the requirements of Subsection (c): (1) socioeconomic background of the student, including family's poverty level, the student's household income, and the educational level of the student's parents; (2) student's status as first generation of the family to attend or graduate from an institution of higher education; (3) whether the wealth per student of the school district the student attended was below the average wealth per student of school districts as determined in Chapter 41; (4) whether the student has demonstrated responsibility in the student's work in school, with the student's family, and within the student's community, including employment, child-care duties or help in raising children; (5) whether the student is a resident of an urban, rural, central city, or suburban area; (6) student's performance on standardized tests; and (7) student's performance on standardized tests in comparison with that of other students from similar socioeconomic backgrounds. (e) States that a person is not eligible to receive a scholarship under this section if the person: (1) has been granted a baccalaureate degree; or (2) has received an athletic scholarship. (f) Requires that an eligible institution match any state funds with the institution's local funds in order to be eligible to participate in the scholarship program. (g) Requires THECB to distribute to each eligible institution the criteria, a description of the weight given to each factor and the role each factor plays in awarding scholarships before the date that applications for scholarships are first considered under this section. (h) Requires THECB to award scholarships from the amount available in the TNHSTF. States that the trust fund is established outside the treasury but is held in trust by the comptroller. Authorizes the money in the trust fund to be spent without appropriations and only to fund the program. Mandates that the interest and income from the assets of the trust fund be credited to and deposited in the trust fund. Allows THECB to spend each fiscal year for administrative costs, an amount not to exceed 2.5 percent of the total money deposited that fiscal year, excluding matching funds transferred to the trust fund under Subsection (f). (i) Requires that each eligible institution transfer local funds provided by the institution under Subsection (f) to the TNHSTF. Requires THECB to use the funds transferred by an institution to provide scholarships to students attending that institution. (j) Authorizes THECB to accept gifts and grants from any public or private source for the purposes of this subchapter, and to deposit a gift or grant to the credit of the trust fund. (k) Authorizes the legislature to appropriate money to the trust fund. SECTION 2. Amends Section 74.3012, Property Code, to read as follows: Sec. 74.3012. DELIVERY OF MONEY TO TEXAS NEW HORIZONS SCHOLARSHIP TRUST FUND. (a) Requires the comptroller to pay any portion of the total amount delivered by local exchange companies that is in excess of $2 million in any state fiscal year to the TNHSTF. Deletes language stating that a local telephone exchange company may deliver reported money to a scholarship fund for urban students instead of delivering the money to the state treasurer. (b) Deletes provisions in Subsections (b), (c), (d), (e), and (g) relating to the urban scholarship fund and makes conforming subsection changes. Defines "local telephone exchange company" as a telecommunications utility certified to provide local exchange telephone service within this state and has 50,000 or more access lines in service in this state and is not a telephone cooperative, for purposes of this section. SECTION 3. (a) Effective date: September 1, 1997, except as provided by Subsection (b) of this section. (b) Requires THECB to adopt the rules for awarding scholarships under Section 54.216, Education Code, no later than December 1, 1997. SECTION 4. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE In SECTION 1 (a), the committee substitute changes "qualified high school graduates" to "qualified students" as those eligible for the Texas New Horizons Scholarship Trust Fund (TNHSTF) and states the purpose of the scholarship. Makes non-substantive language changes. C.S.S.B. 576 adds a new Subsection (c) which outlines eligibility factors for the scholarship. In Subsection (d) [formerly Subsection (c), original bill], the substitute adds language to the eligibility factors to clarify specific information about the student's poverty level, the household income, and the educational level of the student's parents. It also replaces language referring to a student's parents receipt of a baccalaureate degree with clarifying language which would identify if the student is of the first generation of the student's family to attend or graduate from an institution of higher education. C.S.S.B. 576 adds a new Subsection (e) which outlines that a person is not eligible to receive a scholarship, under this section, if the person has been granted a baccalaureate degree or has received an athletic scholarship. C.S.S.B. 576 adds a new Subsection (f) which states that an institution must match state funds with the institution's local funds to be eligible for participation in the program. C.S.S.B. 576 makes clarifying language changes to Subsection (d) of the original bill, now Subsection (g), and deletes specific time period requirements. Subsection (h) of the committee substitute adds conforming language to exclude matching funds transferred to the trust fund under Subsection (f). C.S.S.B. 576 adds Subsection (i) to provide for the transfer of local funds provided by Subsection (f) to the TNHSTF, and establishes certain requirements. Makes conforming changes. C.S.S.B. 576, SECTION 2 amends Section 74.3012 relating to the urban scholarship fund, rather than amending Section 74.3011, relating to the rural scholarship fund. C.S.S.B. 576 deletes from SECTION 3 the repeal of Section 74.3012, as included in the original bill and makes conforming SECTION sequence changes. C.S.S.B. 576, SECTION 3 (SECTION 4 of the original bill) makes conforming language changes to subsection (b) and deletes language requiring THECB to use certain criteria in awarding any scholarships before September 1, 1998.